This drought situation in China is getting interesting.The Chinese wheat crop is the single largest wheat crop in the world, roughly equal to the entire US and Russian wheat crops put together.And so is their annual consumption. That's a lot of wheat.

Clearly a serious crop failure there would have major global implications, wouldn't it?Not at all if you believe what many experts in the West are saying.

Virtually all of the major news services seem to be carrying stories playing down the impact on the market.

"The impact of China's drought on the world wheat trade will be none because of the size of their stocks," says one.

"China is not going to import wheat...they have plenty of inventory left over from last year," says another.

"We, as yet, do not see China becoming a major importer because of its massive Government reserves that could see them through an almost total disaster in the affected regions," say Frontier on their website.They do have plenty of stocks too, somewhere around 60 million tonnes of the stuff depending on exactly who's report you read.

So it's all a load of hype then? Well, the government there don't seem to think so, on Friday they allocated 86.7 billion yuan (about $12.69 billion) from its reserve in relief funds to drought-hit areas.Why would they do that if they had an amount roughly equal to the anticipated entire 2009 production of the US of wheat in state reserves?

Hang on a minute, I'm getting a touch of déjà vu here. Has anyone actually seen these reserves with their own eyes recently?Wasn't there a huge scandal in China not that long ago when it was discovered that storekeepers were getting paid by the government to store grain that wasn't actually there?

Just like the melamine thing was an open secret, you don't suppose it's been common practice for years for storekeepers to sell grain out of the backdoor whilst continuing to fill in the forms to the government do you?What a corrupt Chinese grain storage business as bent as a Arabs sword, surely not.

"Hello,Madoff Grain Storage.Yes, don't worry about your grain it's all here nice and safe for when you want it Mr Government Man, yes, yes, I'm looking at it right now. I counted it all for you yesterday, it's all there, don't you worry. Just wire me the money next week like you always do. Thank you, bye, missing you already."

Even so, this couldn't go on a large scale could it? We'd only be talking what, a maximum of 5% or something? And five percent of a 112.5mmt crop is only 6mmt. Yeah, but what if it had been going on for ten years! What's ten times six again? Bloody hell that's 60mmt!!

It couldn't happen could it? Nah, I'm only messing, that's about as likely as them buying wheat off us! And that isn't gonna happen is it?

What? They did that last month? Get me a nurse.

I love a good conspiracy theory.

My reaction: There is really scary idea. What if China' s 60 million tons of wheat reserves don't actually exists?

1) The Chinese wheat crop is the single largest wheat crop in the world, roughly equal to the entire US and Russian wheat crops put together.

3) Considering it (theoretically) has an amount of wheat roughly equal to the anticipated entire US 2009 production in state reserves, the Chinese government is making an extreme effort to save its crops (spending $12.69 billion in drought-hit areas).

4) There was a huge scandal in China not that long ago when it was discovered that storekeepers were getting paid by the government to store grain that wasn't actually there.

All the more reason why farmers should be stopping the artificial breeding of animals to farm, which eat wheat and soy etc. such as pigs, chickens and cows. At least half of the food value in the animal feed is used by the animals for their own life processes, and so is lost to the human food chain.

There is enough grain for all the people, if we controlled the farmed animal population explosion.